Retirement is in everyone’s vocabulary. It’s known that it should be planned and that money should be put aside. It’s often forgotten companion, though, is estate planning. Estate planning is the process of figuring out the heir or person who will receive your assets, as well as take care of responsibilities for you if you become incapacitated or pass away.
Those who know of estate planning often believe that it is only for the wealthy, but this could not be further from the truth. It’s difficult to avoid leaving loose ends, and doing so could hurt your family. Planning how those loose ends can be tied up will protect those you care about if something bad were to happen. If you’re new to the notion of estate planning, here are the three basics:
If you have children or care for other dependents, you should consider getting a life insurance policy. These plans set your children and dependents up with funds that would help them survive if you were ever to pass away unexpectedly. There are multiple options, but the right one for you depends on your individual needs. In general, the most popular insurance plans include whole-life plans and term plans. Whole-life plans are recommended if you’re buying a policy for a young child. For most people, a term plan makes more sense.
A Will and/or Trust
Perhaps the most well-known aspect of estate planning, a will is a legal document that designates your desires pertaining to the distribution of your property and wealth. What most people don’t realize, though, is that without a will, your property may be subject to default laws that split money between surviving family members in unfavorable ways. Additionally, property cannot go to minors, so a will is necessary to designate how the assets will be held until they come of age.
Proxies and/or Power of Attorneys
If you become incapacitated and cannot manage your health and funds, you’ll need someone who can access your accounts and make important decisions on your behalf. The person you appoint is legally obligated to act in your best interest, but the title can be revoked at anytime. In marriage, your spouse has power of attorney by default if you become incapacitated.
Planning to build wealth is incredibly important, and what happens to that wealth after you pass away is an important part of financial planning. Most often, wealth is transferred to heirs and surviving family members. Without preparing for the worst, assets may be designated in ways that clash with your desires. Protect your wealth and those you love by estate planning.
Chris Jacob is a Registered Representative with Saxony Securities, Inc. Securities offered through Saxony Securities Inc. (SSI). Member FINRA, SIPC. Non-security products and services or tax services are not offered through SSI. Cadeau is not affiliated with SSI.